Question

PART A

Which of the following is not a valid statement?

Multiple Choice

• Companies that consistently earn rates of return above the floor are said to have a competitive advantage.

• Competition in an industry continually works to drive down the rate of return on assets toward the competitive floor.

• Rates of return that are higher than the industry floor stimulate more competition as existing companies innovate and expand their market reach or as new companies enter the industry.

• Competitive ceiling is the rate of return that would be earned in the economist’s "perfectly competitive" industry.

PART B

Strategies to gain a competitive advantage include product differentiation and

Multiple Choice

• improving product quality and reliability.

• low-cost leadership.

• building brand loyalty.

• developing superior products.

Answer 1

Answer- Part-A

The following statement is not a valid statement

Rates of return that are higher than the industry floor stimulate more competition as existing companies innovate and expand their market reach or as new companies enter the industry.

Explanations:-

The above statement is not a valid statement and other are the valid statements

Answer-PART B

Strategies to gain a competitive advantage include product differentiation and low-cost leadership.

Explanations:-

The four primary methods of gaining a competitive advantage are cost leadership, differentiation, defensive strategies and strategic alliances.